Chase was named one of the most influential people in Digital Health due to his entrepreneurial success & writing along with luminaries such as Eric Topol, Patrick Soon-Shiong, Vinod Khosla & Elizabeth Holmes. He speaks to & consults with new ventures inside of established companies & high growth startups. Chase is widely published. The book Chase co-authored won the healthcare Book of the Year in in 2014.
Chase has a penchant for making connections between previously disconnected trends and making them understandable and actionable. Chase is in the development stage of a documentary that seeks to make the indecipherable understandable and demonstrate that there is reason for great optimism that a partnership between doc-entrepreneurs and forward-looking clinicians with individuals (fka “patients”) can dramatically out-perform against Quadruple Aim* objectives compared to traditional healthcare orgs.
*The Quadruple Aim is the Triple Aim (improved outcomes & patient experience with lower costs) plus the overlooked 4th Aim — clinician satisfaction critical to improving the current condition where an alarming number of clinicians are overburdened & burnt-out which negatively impacts their lives as well as the individuals they care for.
Chase was the CEO & Co-founder of Avado, which was acquired by and integrated into WebMD and the most widely used healthcare professional site - Medscape.
Before Avado, Chase spent several years outside of healthcare in startups as founder or consulting roles with LiveRez.com, MarketLeader, & WhatCounts. He also played founding & leadership roles in launching two new $1B+ businesses within Microsoft.
Chase is a father, husband & oxygen-fueled mt sport athlete. His 2014 team placed 3rd in their division & 24th overall (out of 500 teams) in America's oldest adventure race (7 legs -- XC ski, downhill ski, run, road bike, canoe, mt. bike & sea kayak) where Dave took on the Nordic ski leg. Dave was a former PAC-10 800 Meter competitor.

Xboxification of Healthcare

Healthcare organizations are rapidly trying to reinvent themselves in light of the new rules of the game. One could argue it officially started October 1st of this year with Medicare’s readmission penalties. People are calling this the “no outcome, no income” era. While it may look the same from the outside, I can’t think of a bigger change facing an industry. Almost overnight, what a healthcare provider was previously rewarded for (e.g., ordering tests, hospitalizations, etc.) they will now get penalized either directly or indirectly.

In my role introducing patient relationship management systems, I’ve had the opportunity to speak with and observe many “Innovation” organizations that have been set up in virtually every health system in the country (and most health plans and pharma as well). The innovation groups have been established to respond to the daunting changes their organizations are facing. I’ll draw an analogy to distinguish two approaches to tackling a changing industry landscape. Having spent the 90′s at Microsoft, I saw two major efforts to push into a new areas with MSN and Xbox where the rules of competition were radically different. In the last 15 years, I’d argue Xbox is one of only two stand-alone successes Microsoft has had (the other is Expedia). This, despite spending billions on MSN. Unfortunately, I am observing most healthcare providers choosing the path MSN took.

Innovation Through the Filter of Existing Operations Ensures Failure

Let me describe what happened with MSN and you’ll find it has striking similarities with what most health systems are doing today. That is, applying old strategies in a new landscape where the rules are very different.

Microsoft’s Achilles Heel in online services was that it’s historic success was putting laser focus on an established competitor. That’s fine when there is a WordPerfect, Lotus or Mac who has already developed a market.

The challenge is it’s hard for a big company to take seriously a new market segment when its initial revenue impact is a tiny fraction of their existing business. Microsoft, after all, was in the search business well before Google was founded. However, since Search didn’t appear to have much impact on gaining marketshare in the ISP business, it didn’t get sufficient focus until it was too late. Through the ISP lens, Search didn’t have much effect, but that viewpoint blinded Microsoft to the massive opportunity Search became.

Interestingly, there was a short period of time where MSN’s advertising business was off the radar of Microsoft’s senior executives (they were focused on MSN as an ISP trying to build an “AOL Killer”) and thus was unshackled. During that time, MSN’s ad business became a billion dollar, profitable enterprise. Shortly after abandoning the ISP business, MSN’s fate was sealed when it was infused with former Windows and Office leaders. Those two businesses, as two of the most successful franchises in the history of business, have continued to fund Microsoft’s online services losses. However, bringing in Windows and Office leaders shackled MSN with thinking that these businesses were applicable to MSN’s business. Many of MSN’s decisions were put through the lens of Windows/Office. It became a running joke about how many times one would hear “this is just like Windows/Office” come from the Windows/Office alums. Actually, what it takes to succeed in Internet services has almost nothing to do with Windows/Office. If it did, you’d see a bunch of Windows/Office alums leading Google, Facebook and Twitter.

New Reimbursement Models Bring New Rules of Competition

The lesson for healthcare providers is that new reimbursement models such as various accountable models (e.g., ACOs, Health Homes, etc.) will have entirely different success metrics. They will also have new competitors. For example, a hospital-based ACO is just as likely to be competing with a large multi-specialty practice running an ACO versus another hospital. The latter doesn’t have hospital revenues to protect so they can be more aggressive. There’s also non-obvious competitors for lucrative areas of health systems. Some examples follow:

Walmart is the most visible example of creating a national market for surgeries where it once was only a local market. No matter how small a market you are in as a surgery center, local hospitals are now competing with Mayo and Cleveland Clinic for non-emergent surgeries. For Walmart employees with health benefits, they just made an offer that is almost impossible to refuse.

As William Gibson said, “The future is here. It’s just unevenly distributed.” One of the tricks for healthtech startups is to find those pockets of the market that are aggressively moving to new models. As Zina Moukheiber reported, programs such as the New York Digital Health Accelerator (NYDHA) where traditional providers are actively involved recognize that their legacy vendors won’t have solutions for the new models for years. The 22 providers in the NYDHA are representative of a trend of openness to emerging companies that hasn’t existed in the past. [Disclosure: My company was one of the companies selected for this statewide program in New York.]

The Keys to Success are Changing

In contrast to MSN, Xbox has a fundamentally different business model ranging from how it distributes to how it prices. Xbox’s leaders were unshackled from Microsoft’s traditional constraints. Healthcare is also facing a fundamentally different landscape. It’s clear healthcare is shifting to a more patient-centric, accountable and coordinated model. Companies such as mine believe it is going to be virtually impossible to succeed in the new reward structure without recognizing a reality of this new environment. That is, more than 75% of all healthcare spending goes towards chronic disease. As things rapidly shift to a “no outcome, no income” model, providers have to understand who drives outcomes. In chronic disease, it’s the patient and family/caregivers (not healthcare professionals). The patients/families are the ones that decide whether to fill prescriptions, complete prescriptions, diet, exercise, lifestyle, etc. Providers ignore patients at their own peril.

Despite this, often the first questions we receive when discussing patient relationship management systems is “how does this integrate with my EHR?” While any patient engagement company must have a strong answer to that question, it’s far from the most important question. It’s understandable that providers will ask this question given that EHRs are a critical success factor in the fee-for-service environment. In those environments, you hear a lot about “revenue cycle management”. That’s the category of software functionality that has a clear objective: how a provider can get as big a bill out as fast as possible and then get paid as quickly as possible. The more important question is “where do we start to get patients engaged in their health?”

For insight into the difference makers in this new environment, we studied the organizations who were ahead of the curve in the patient-centric, accountable, coordinated models that are about to become mainstream. It was striking that they never brought up EHRs when asked what are the keys to success in improving outcomes for patients with chronic disease. This took us aback at first, but it made sense upon further consideration. The fact is people with chronic conditions know what their condition is and they generally know what medications they are on. Even with lab scores they at least know if they are good/bad and getting worse/better. These are the sorts of things that old line, silo’ed patient portals share. Turns out those bits of information aren’t the linchpin to success. One of the most astute observers in healthIT is John Moore of Chilmark Research who tweeted about the over-focus on EHRs in the new environment

So tired of all this discussion of EMRs/EHRs. Again, time to talk about CHR, collaborative health record for doc & pt.

In practice, the most important medical “instrument” for the organizations that have tackled tough populations of patients (e.g., low income, multiple chronic conditions) is communication. Since legacy healthIT look at “patients” as largely a vessel for billing codes and don’t involve patients, these organizations put in place their own “systems”. The “system” was some combination of phone, text, sheets of paper, email, and Excel. This hodgepodge of tools helped patients communicate with their providers and track their health which were the key determinants in improving outcomes. [See also What's Ahead for EHRs (PDF) from the California Health Care Foundation for more on the roots of EHRs.]

Even providers such as Kaiser who have spent billions on healthIT started with the basics to get patient engagement rolling. They simply started with secure messaging which has no integration with the EHR. Over time, providers will get more sophisticated where two-way integration with EHRs is important but it’s not where to start. Recognizing that patient engagement is new territory for most healthcare providers, HIMSS (the professional association for healthIT) commissioned a book on patient engagement and it will be a major theme of their annual conference. [Disclosure: I was one of the co-editors and writers for the book.] In that book, there is a chapter giving step-by-step directions on where providers should start.

The New England Journal of Medicine recently reported on how the last 20 years have brought great labor productivity gains in virtually every industry but healthcare. In fact, healthcare labor productivity actually declined 0.6% annually over the last 20 years. It’s one of the reasons I have said legacy HealthIT is so bad. In other words, legacy healthIT has had 20 years to show it can improve efficiency, but it’s clear they had a different design point. Virtually everyone recognizes that healthcare is entering a deflationary period. Thus, labor efficiency will be a key to success as budgets get severely tightened. Wise providers are starting to recognize that there are tasks that can get off-loaded to patients. A byproduct is labor efficiency.

“We have come to realize we have to incorporate the most important member of the care team — the patient. With our finite resources, we must figure out ways to offload what we have thought as tasks that needed to be done by our staff. In most cases, it’s the patient who can do it more effectively. In the process, the patient is more engaged and it’s more efficient for everyone.”

Xbox’s Model Unshackles Healthcare Innovator

Smart healthcare leaders are recognizing the flaws in following the “MSN” model. They are instinctively deploying a model that is akin to what Microsoft did with Xbox. Microsoft created a new line of business. Perhaps more importantly, they physically and culturally separated them from the mother ship. The leaders of Xbox recognized that the keys to success in a console game were very different than the keys to success in operating systems and desktop applications. So much so that they rejected using Microsoft’s crown jewel — Windows — as its underlying operating system. It took great leadership by Bill Gates and Steve Ballmer to allow that decision in the face of screams of protest from the Windows team. How many organizations would allow that sacred cow to be slaughtered? Yet, this was an important symbolic move.

Apple is held up as a great model of integrated computing devices in the consumer arena. Yet, it was Microsoft that released a highly successful consumer electronics device in November 2001 many years before the iPhone and iPad though coincidentally it was within a month of the iPod’s initial release. Xbox is now a successful business in its own right but it was always about having an asset for the next battlefield for computing — the living room. Without it, Microsoft wouldn’t have a prayer in the living room today.

Healthcare providers should take a page out of Xbox’s book by utilizing the resources of the parent organization without being shackled by it. For example, the new accountable organizations within a health system should be able to contract with the parent. If the parent isn’t competitive, better to have an internal group shine a light on that before third parties do. As the Age of Agility hits healthcare it’s imperative that the innovators are free to unleash innovation critical to the enterprise’s survival.

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Another great piece. The “no outcome, no income” part of healthcare changes starts with simple things like readmission but will eventually work its way to ‘payment by condition’ rather than insurance or government payment based on services rendered (at the discretion of a doctor, regardless of necessity or effectiveness). Don’t know if you know Dr. Gary Kaplan of Virginia Mason, but I had a chance to interview him a while back for this story:

Accountable healthcare is, as you say, extremely disruptive. The model matters enormously and there will be big winners and losers. While you’ve said they should use the resources but be unshackled from the model, I’m not sure I hold out a great deal of hope for those who’ve been successful in the past, and that includes health networks and Health IT vendors.

I tend to agree with your final comment. There is a chance at reinvention but few will choose that path. I think it’s loosely similar to IBM (at least for the HealthIT vendor portion of your comment). That is, while most of their mainframe/minicomputer competitors are no longer, they managed to reinvent themselves before it was too late.

Agree on the value of Xbox and did a nice write up on a inventor from Israel when I attended the Israel Conference in LA this year which is great for physical therapy with using Kinect . Video and more information here. Good stuff.

The year before at the conference I got to spend some quality time with Ilan Spillinger who brought Kinect to Microsoft and then to Xbox and we know the rest of how this has emerged moving over to the PC side as well. I liked the story too on how Kinect got there, very interesting story from Ian. It was interesting to hear how some of the work comes out of the Israel incubators to compare to what we do here and believe me they are very focused.

We just have to remember that every company doesn’t make it from the incubators or accelerators and when they are that close together, some can join forces so we end up with some real good collaborations and if that doesn’t happen like I said sometimes their code can be bought for some price by someone else. I said recently it’s a good place for insurers to buy cheap code and I’ll be darned if I didn’t two doctors write to me asking for some advice on what they might buy:) You never know out there today.

You didn’t call out the legacy systems but you seem to imply they are the a problem? How do you explain that the VA and places like Mayo and Kaiser all use “legacy” systems and serve millions and millions of patients and have the highest outcomes in terms of quality?

In the Seattle area where you live Group Health with over 1000 providers uses the largest legacy system (epic) and it has the highest rates of patient participation in the US. It isn’t the EHR (the tool) that drives patient engagement it is the culture (both GHC and Kaiser are co-ops) and they didn’t even implement the billing module.

There is no question that patients need to be key members of their own care team but there is little evidence to suggest that once someone has one or two or three chronic conditions that life style changes alone can reverse cancer, diabetes two of the biggest drivers. (you can prevent future conditions though)

Finally in many cases the change in re-admission rates is small (the article you linked show that rates were .4% hardly enough to be a game changer)

There is no question we are in the midst of a change in our health care system but the solutions need to happen at the systems level (ie payments) and culture not solely at the techn0logical level. That is just the tool we use to strengthen the communication between everyone on the health care team (including the patients) and both the legacy IT systems (Epic) and legacy healthcare systems (Group Health is 60 years old) are as much in play as the new IT and health care startups.